It can be pretty daunting raising the funds to travel long-term. A lot of the time you are on the road you will not be working or earning any kind of income. Moreover, you never know what big costs may be around the corner so ideally you want as much money stashed away before you leave as possible. Fortunately, there are a number of things you can do to build up your travel savings quicker, many of which don’t even require that much effort. The below list of my top tips for maximising your savings before you go:
1. Create a budget
I know, I know – you’ve heard this tip a million times before, but there’s a reason: it works! The number one thing that anyone can do is to save more money is to manage their income responsibly (boring, I know). To do this you first need to determine what your income and expenses are. While you can create your own spreadsheet for this, I recommend the lazy person’s option of using a budgeting website. In the U.S. people rate Mint very highly, but this isn’t available in Australia, so I recommend MoneySmart. For New Zealanders Sorted is also a great resource.
2. Cut back on your expenses
After creating a budget you should now have a good idea how much money you’ve got coming in and how much is also going out. With this information in mind, it is now possible determine what expenses you can cut back.
In the interest of transparency, I have provided a rough summary of my own monthly budget below.
|Expense||Monthly Cost (Approximate)|
|Utilities (gas, electricity, hot water, internet)||$110|
|Insurance and medical||$100|
|Entertainment and eating out||$200|
|Clothing and accessories||$200|
For various reasons your spending is likely to look a lot different to mine. For example, you may have a mortgage, roommates, or live somewhere that you have to pay more (or less) in rent. Likewise, you may need a car or may prioritise social activities and eating out more than I do. No two people are identical in their spending, which is exactly why you need to work out where your money is going.
Ultimately, there are two main ways to cut your expenses back: renegotiate your essential expenses; and reduce your non-essential spending.
a) Renegotiate your essential expenses
Once you have put together your budget, chances are that your biggest expenses will be the essential items (e.g. rent, utilities, phone, insurance). Many people take these expenses as a given when in reality they’re not. In fact, one of the best things you can do to get your total expenses down is to simply renegotiate your bills or find cheaper providers.
In my case I knew that I was already had a great deal on my rent so I didn’t bother looking for a better deal. For many of you though, it might be possible for you to pay a lot less if you just look around a bit. Can you save some money by living in a different suburb / less centrally? Do you really need all those bedrooms? Maybe you could get a roommate or rent out any spare bedrooms on AirBnB? The options are endless…
With my utilities I saved some money by researching what the best deals available to me were. Most power companies were charging pretty much the same (very high!) rates so I called the company I was with to see if they could offer me a better deal. Sure enough they did, and I received more than $100 in cash back credits.
My phone bill was another area I made some savings. I was on a plan with unlimited texting and calling, and 5GB of data per month, but I only really needed the data and even then I only used about 3GB. Again, once I decided to change providers to only pay for what I really needed, my current provider offered me a 20% discount on my bill. This made it more than worth my while to stay with them.
In the grand scheme these changes may have only saved me a couple of hundred dollars, but the payoff I received was well worth it given the minimal involved. Moreover, there are also a number of comparison websites out there that make it even easier to you better value for money.
b) Reduce your non-essential spending
One thing that many of us can probably afford to do is cut back our spending on the non-essential items. For different people this means different things. Do you really need to buy lunch everyday? And do you really need that magazine subscription or that new pair of shoes? As hard as it may be, every time you go to make a purchase you need to consider if it is really worth the money (and potential experiences) you are sacrificing. Besides, once you have decided to travel, chances are that item you ‘had to have’ at the time probably isn’t going to fit in your luggage and you’ll have to get rid of it anyway. Knowing this fact certainly helped me spend less!
- Cancel your gym membership and go running, cycling or do bodyweight exercises instead
- Catch public transport, walk or cycle
- Cook your own food instead of eating out
- Take a packed lunch to work (click here for some yummy ideas)
- Cancel any magazine subscriptions
- Visit your local library or get a kindle instead of buying new books
- Invite friends over for drinks or a ‘bring a plate’ dinner instead of meeting at a bar or restaurant
- Socialise over activities that don’t cost any money, such as going to the beach or for a hike, or visiting parts of your city or region you have never been to before
3. Put together a savings plan
Once you have cut your expenses down you will also be able to put together a savings plan. Everyone has different ideas about how to do this, so I will share with you the method that worked for me.
- Set up two savings accounts: a high interest savings account and another, secondary savings account to keep some money in for emergencies
- Set up an automatic payment to transfer money from your cheque account (used for everyday spending) to your high interest savings account after every pay day. If you do this you are forced to stick within the budget you have set yourself. Just make sure you set the automatic payment at a reasonable level, i.e. high enough that you don’t overspend and low enough that you won’t be forced to dip into your savings (sacrificing any bonus interest that would otherwise be payable to you) to make ends meet.
- If you have any money left in your account at the end of your pay period, transfer this to your secondary, more accessible savings account. By doing this you will have some extra money on hand in case of an emergency and you hopefully won’t have to use any of the money in your high interest savings account. As an added bonus, when you leave for your trip any money leftover in this account can then be put towards your savings!
For advice on choosing a high interest savings account see 7 below.
4. Sell all your crap!
The most satisfying / liberating way that I saved some money for my trip was to sell all my stuff. Tom and I are leaving Melbourne indefinitely so we didn’t want to have to fork out for the cost of storing things that weren’t important to us anyway. Also, knowing well in advance that we were leaving gave us plenty of time to ensure we got the best prices for our stuff.
The best way to sell items ultimately depends on how much time you have and what avenues are available to you. Tom and I sold most of our big stuff, like furniture and appliances on Gumtree (use Craig’s List if you’re in the U.S.) because they don’t charge you a massive sellers fee like eBay. However, Gumtree does have its cons – in particular, the search function is terrible and you will have to deal with a lot of time wasters offering you $10 for something you know you can sell for at least $100. Many other items we advertised on both Gumtree and eBay to make sure all our bases were covered. Another good way to sell items was on brand-specific Facebook groups. For example, I sold a quite a few pieces of used clothing for a good price on Lululemon buy, swap, and sell groups.
Between us, Tom and I made $8720 in total from selling 108 items that we no longer needed and in many cases forgot we even had! Think of all the places that money could take you!!!
For a more comprehensive guide to selling your stuff visit this Lifehacker (a.k.a. The Bible) article.
5. Pick up odd jobs
Another way to save more money is to make a bit of extra cash on the side. As a bonus, these jobs are usually tax-free, leaving you with more money in your pocket. Babysitting and pet sitting are good little money earners and often involve minimal work. Because our preference was to look after fur babies rather than real babies, Tom and I signed up to multiple pet sitting services, such as Mad Paws, which connected us with people looking for someone to care for their pet. Through these services we had the opportunity to earn an additional $1000+ to go towards our travels.
If you have a particular skill you can also use this to make some extra dough. Tom has a carpentry background so he collected old and broken pieces of furniture, restored them and sold them for a profit. I’m not as handy as he is, but if you have a special skill like Tom then by all means go for it!
Another great way to pick up odd jobs is to look on websites such as Airtasker and SpotJobs, where individuals post small jobs they need completed in exchange for cash. Tasks vary from data entry and website assistance, to house cleaning, moving furniture and liking Facebook pages.
6. Sell your expertise (not your soul)
If you are looking for a secondary income that is a bit more substantial than what you get from these odd jobs, another option is to do freelance work. Depending on your area of expertise, you can create a nice little side business working online that you can possibly even continue when you start your travels. Some websites to get you started are:
- Elance is good for various types of online jobs, such as writing, graphic design and website support (visit this post for a great guide to earning money on eLance)
- Various sites such as The Write Life, Make a Living Writing, Write Naked, Funds for Writers, Cracked and Listverse all pay writers a small amount for articles or guest posts
- Start a blog
- Getty or iStock for selling images
7. Earn money on your money
Now that you’ve followed steps 1-6 your piggy bank is probably starting to look a lot fatter! With this in mind, the next step is to choose the best bank account to help you maximise the rate of interest you receive. I personally use a high interest savings account with Bankwest in Australia. This account initially earnt me an extra 4% in interest, but recent dropped to 3.25% in line with the rest of the banks. Either way, so long as I deposit at least $200 per month I earn approximately $175 every month for doing nothing, and I think you’ll all agree with me that free money is the best money! Online savings accounts usually offer the best interest rates, but term deposits and other types of accounts are also worth checking out. Again, use a comparison website, such as infochoice.com.au (Australia), nerdwallet.com (USA), canstar.co.nz (New Zealand), and moneysupermarket.com (UK).
I know that in many countries (I’m looking at you, USA!) the interest rate on savings is very low at the moment, in which case this kind of outcome may not be available for you (sorry!), so you may want to consider an investment account instead.
8. Put everything on credit
Another tip that may sound counter-intuitive is to make all of your purchases on your credit cards. There are some caveats to this tip though. First, this advice only works if you have a rewards credit card (i.e. one that earns you frequent flyer points, cash back, or some other kind of points). Second, you must only use these cards for purchases you would have made anyway / absolutely need to make. It’s all too easy to get a little carried away with credit cards, and multiple studies have shown that people who have credit cards tend to spend quite a bit more than those who don’t have them. And third, always, and I mean ALWAYS, read the fine print!
However, if you can follow this advice responsibly and choose credit cards with good sign-up bonuses / no or very low annual fees, you can save a lot of money by using these reward points to book flights and accommodation.
Within the space of a year Tom and I managed to collect hundreds of thousands of frequent flyer points this way, which we have so far used to pay for a number of flights and other goodies such as car rentals.
9. Claim your tax back
Again, this tip depends on where you live, but here in Australia doing your taxes can lead to very fruitful results! To maximise your refund be sure to keep all receipt related to activities like work and study that you may be able to claim back. Also, if you haven’t filled out your tax returns from previous years then go back and put your financial information onto one of the government online tax calculators. You may be surprised at how much tax you are actually owed!
What tips to you have for saving money? Please share these in the comments section below. 🙂